In many relationships, partners adopt what are seen as “traditional” roles: one party works and brings in income and one party stays at home to raise and care for children and to manage the household and domestic realm. Males or females may perform either of these roles.

If the spouse working outside of the home earns more income or accumulates more assets than “average”, .how does the Court weigh and consider these disparate types of contributions?

Imagine this scenario:

Spouse A: A high earning business entrepreneur

During the course of a fifteen-year marriage Spouse A has built a successful and high-earning business with assets in the tens of millions. That party’s exceptional business acumen has led to significant income which has throughout the relationship been applied to the family unit for support and asset accumulation.

Spouse B: A stay-at-home spouse

In addition to being a stay-at home parent to the parties’ children, Spouse B has also assisted with the business in various ways as a shareholder and joint director. Additionally, Spouse B has supported and encouraged Spouse A when the business faced difficulties, acted as a sounding board for concepts and ideas, and generally ensured that Spouse A was able to venture out into the business domain.

What does the Court have to say?

In times gone by it could be successfully argued that, as the entrepreneurial ability and “special skills” of Spouse A were largely responsible for the accumulation of assets, they should receive a higher percentage of the asset pool.

This line of reasoning undervalued the contributions made by Spouse B, particularly with respect to homemaking and parenting.

Today, the Courts have quashed the existence of a doctrine of “special skills” or “special contributions” that was historically argued in high wealth cases.

In the 2015 case of Fields & Smith the Full Court of the Family Court stated that the legislative power to alter property interests “does not provide endorsement for any category of contribution related to any class of property (for example, high wealth) being, by virtue of that category or class, more valuable or important than another. In each case the contributions made by the parties must be evaluated in the context of the facts particular to that case.”

The Court discussed and evaluated the contributions of the Husband and Wife in a 29 year relationship. At first instance the Court divided the assets 60% to the Husband and 40% to the Wife. The Wife appealed seeking an equal division of assets and the Husband cross-appealed seeking a division 70% in his favour. They each argued that the first instance Court’s decision had inadequately weighted their respective contributions over the years of their relationship.

In upholding the Wife’s appeal and dividing the assets ($32 – $39 million) equally, the Full Court stated:

The contributions of the parties over a lengthy period were substantial and significant. The wife’s contributions to the welfare of the family are in themselves significant contributions and s79 does not suggest that one kind of contribution should be treated as less important or valuable than another….. the wife’s contributions in this case were not limited to homemaker and parent or to the welfare of the family generally. She had involvement in the business itself and the contributions she made prior to the establishment of the business in assisting the husband in improving and selling their homes form which they moved regularly contributed to the capital to start the business. Once the business was operating, the wife was a director and there was no suggestion that that role was not assiduously carried out by her. As a result of the fact that the business will continue, that role will continue. We have previously pointed out the obligations that come with being a director. In addition, the wife participated with the husband in decisions which involved the corporate structure, such as transferring part of their shareholding to others who would be able to ensure the continuance of the business. In this case, these are all significant contributions…..

The Court determined that the Family Law Act 1975 does not impose any principle making direct financial contributions any more special or important than other contributions, including contributions to the home or welfare of the family.

What does this mean for me?

If you face a similar situation to the above scenario, what you need to know is:

1. when making orders to alter property interests, Courts have a wide discretion to weigh up the different contributions of parties to a marriage or a de facto relationship.
2. Section 79(4) of the Family Law Act 1975 empowers the Court, when making orders in property settlement proceedings, to have regard to various categories of contribution including:
   • Direct financial contributions to the acquisition of property (e.g. paying the deposit on the family home);
   • Indirect financial contributions to the conservation or improvement of property (e.g. paying rates and utilities bills for the family home and renovations to the family home);Non-financial contributions (e.g. One party staying home to look after the children thereby enabling the other party to work full-time); and
   • Contributions to the welfare of the family (e.g. Homemaking and parenting).

When making a property settlement order pursuant to section 79 of the Family Law Act, the Court has discretion to weigh up and assess each of the above categories of contribution on a case by case basis.

Where to now?

Contact us for free initial legal advice or representation regarding family law property settlement.